A former colleague of Bank of England Governor Mark Carney will be paid £1,500 per day to conduct an independent review of how the Co-op Bank was regulated before its near collapse in 2013.

The Bank’s Prudential Regulation Authority (PRA) detailed the daily rate for Mark Zelmer in an update to Economic Secretary John Glen, who called for the investigation earlier this year.

Mr Zelmer will conduct most of the investigation from Ottawa, Canada, where his pay will equate to more than 2,600 Canadian dollars per day based on current exchange rates.

He will also have the support of a team from Grant Thornton UK.

The investigation must be completed within one year of Mr Zelmer’s appointment – which was finalised in March.

The former Bank of Canada employee was a colleague of Mr Carney, having overlapped during the latter’s five year stint as the central bank’s governor from 2008-2013.

However, the PRA has said that Mr Zelmer never directly reported to the Governor but did work with him on “some parts of the Governor’s agenda”.

“After careful consideration, we concluded that any risk of a perceived conflict of interest in this regard is minor and manageable. We understand that the Treasury shares this view,” the PRA said in letter to the Treasury Select Committee chair Nicky Morgan in March.

“We found no other issues around conflicts of interest and Mr Zelmer has confirmed that he himself is unaware of any.”

Mr Zelmer has also worked with the International Monetary Fund, been a representative on the Basel Committee’s Banking Supervision and Financial Stability Board, and served as the deputy superintendent of Canada’s Office of Superintendent of Financial Institutions.

His probe will look at the “actions, policies and approach” of UK regulators responsible for the supervision of the Co-op Bank – including the PRA and Financial Conduct Authority’s predecessor the Financial Services Authority (FSA) – between May 2008 and November 2013.

It covers a period of turmoil for the Co-op Bank, including its aborted bid to buy 632 branches from Lloyds Banking Group in 2013.

The bank nearly collapsed that same year, dragging down the wider Co-operative group to a £2.5 billion annual loss after a £1.5 billion hole was discovered in the lender’s balance sheet.

It had to be rescued in a deal which saw the group’s stake in the lender shrink from 100% to 20% as it ceded majority ownership to bondholders including US hedge funds.

The Co-op Bank has since fully severed its ties to the Co-operative Group, after a 2017 refinancing and restructuring deal was agreed to by the hedge funds.

There was further damage to the bank’s reputation after a drugs scandal involving former bank chairman Paul Flowers, and sharp criticism about how the Methodist minister was appointed to the role despite a lack of experience.

He was forced to step down amid allegations he bought and used illegal drugs, as well as claiming inappropriate expenses including using his work mobile to make a number of calls to premium rate chat lines.

Mr Flowers – who was chair of Co-op Bank between 2010 and 2013 – was banned from the financial services industry by the FCA earlier this year.